Are SA companies ready for shared value?

By Nicola Robins (21 January 2014)

CSV-HBRWhen Michael Porter and Mark Kramer published ‘Creating shared value‘ in Harvard Business Review in February 2011, the impact was huge. Although much of it was positive (a stellar citation rate; articles in The New York Times, The Economist, The Guardian; Davos roundtables; McKinsey’s award for the best HBR article in 2011), many within the sustainability community were less impressed.

John Elkington, executive chair of Volans and the nearest sustainability has to a founding father, took Porter deftly to task for his lack of subtlety.

Paul Polman, Unilever CEO and sustainability’s leading light ever since he told short-term speculators to sell their shares in his company, was also unconvinced.

Others decided that the difference between sustainability and shared value was simply semantics. We don’t agree.

Admittedly, Porter was a little overzealous about the novelty of the concept in 2011. But three years on, there’s no doubt that he and Kramer have achieved something significant.

Shared value has succeeded in doing what others in the sustainability industry have not: clearly distinguishing meaningful social innovation – at scale – from the predictable mix of everyday virtue that has dominated sustainability efforts over the past decade.

A sustainability strategy is typically a broad response to social and environmental challenges. A careful fusion of compliance, efficiency, good governance, employee engagement, supply chain optimisation and public relations, sustainability initiatives are important and companies are better for having them.

Shared value is something more specific. It is about social innovation – at scale – as a business proposition. It is not a compliance programme. It is not good governance, though it clearly benefits from it. It is not about PR – though it is certainly being used as a differentiator.

Shared value cuts through the breadth of sustainability endeavour to focus on a measurable blend of social and financial returns. It’s about new products, reconfigured value chains and socio-economic development, at scale.

This streamlined focus gives shared value an edge. It’s subtle. Kramer speaks about it as an inflection point. “But,” he says “this slight change in direction has big implications for where companies can take it.” Shared value is not an alternative to sustainability; it’s a catalyst for taking it deeper. It drives what sustainability has often spoken about but struggled to deliver: competitiveness and innovation.

We see it as a timely rebrand of an aspect of sustainability that has all but drowned in a deluge of reporting guidelines, “investor” surveys and corporate awards.

You can find some recent shared value case studies here. They are far more akin to growth strategies than compliance or PR initiatives.

This difference is the reason Incite accepted an invitation to become the first African affiliate of the Shared Value Initiative.

It is why we found ourselves at a lively three-day training in London with Mark Kramer and the Shared Value team towards the end of last year.

And we look forward to sharing some South African examples later this year.

We see three reasons why South African companies are particularly ready for shared value:

  1. We’re a leading indicator on social risk: The World Economic Forum’s 2014 Global Risks report cites the chronic gap between rich and poor as the biggest single risk to global markets.
  2. Our competitiveness rankings are under pressure, with particular concerns in relation to the macroeconomic environment, higher education and labour market efficiency.
  3. The National Development Plan is desperately in need of activation, and politicians are too busy politicking to make it happen.

Here are a few predictions for 2014:

Virtually every large company will use the words “shared value” in their integrated report. It’s a terribly popular term.

A very small fraction of companies will actually shift their black economic empowerment and green initiatives onto a measurable shared value platform.

Those companies that do will be identified as value investments within the next three years.

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